Report: Consumer prices fall in May by most in 3 years

WASHINGTON, D.C. — A report released by the Labor Department on Thursday showed that the cost of living in the U.S. dropped in May by the most in three years.

The consumer-price index declined 0.3%, more than forecast and the biggest drop since December 2008, after no change the prior month.

Economists projected a 0.2% decrease, according to the median estimate in a Bloomberg News survey. The core measure, which excludes food and energy costs, increased 0.2% for a third month.

“The drop in the headline is encouraging for the Fed because it shows gasoline prices are less of strain on consumers’ incomes, which means they can pick up spending in the summer months,” Jeffrey Greenberg, an economist at Nomura Securities International, told Bloomberg. “Unemployment is the Fed’s big concern. They aren’t worried about inflation going out of control.”

Estimates from 78 economists ranged from a decrease of 0.6% to an increase of 0.2%.